New rules to guide house, car loans for civil servants

What you need to know:

  • Top State Officers such as governors, Cabinet secretaries, the Secretary to the Cabinet, the Attorney-General, the Chief of the Defence Forces and the Auditor-General can borrow upto Sh40 million for a mortgage and Sh10 million for a car loan.
  • National Treasury Cabinet Secretary Henry Rotich on Sunday said that the scheme has already been approved and money will be available to civil servants through a partner bank to be picked competitively.
  • Mr Rotich said the mortgage plan will be managed by the Ministry of Lands, Housing and Urban Development while the car loan scheme will be under the National Treasury.

The Treasury is now working on regulations on how the multi-billion-shilling civil servants mortgage and car loan fund will be managed before public servants and state officers can start borrowing.

National Treasury Cabinet Secretary Henry Rotich on Sunday said that the scheme has already been approved and money will be available to civil servants through a partner bank to be picked competitively.

The fund allows public servants to borrow between Sh4 million and Sh40 million under the mortgage and housing scheme and between Sh600,000 and Sh10 million under the car loan scheme. An interest rate of three per cent will be charged on both the mortgage and the car loan schemes which is more likely to benefit senior staff and those with high salaries.

Mr Rotich said the mortgage plan will be managed by the Ministry of Lands, Housing and Urban Development while the car loan scheme will be under the National Treasury.

TEACHERS' OFFER

These perks were part of the package that teachers had been offered when they went on strike for two weeks last month.

“We are developing regulations that will help us manage this scheme... before those qualified can begin to benefit,” said Mr Rotich.

The mortgage plan, whose actual value will be determined this week, will be put under an expanded development fund already being operated by the government’s housing department.

Said Mr Rotich: “We are expanding this fund to allow many people to benefit from the facility which will be entirely a revolving fund.”

The government also intends to start a low income housing fund targeting low income earning civil servants. The facility will be designed along the Ethiopian model where low income earners access mortgages of up to Sh2.5 million for modern, decent but low-cost homes.

“We intend to come up with a facility that can benefit low income earners as well by constructing low cost high-rise buildings in Shauri Moyo, Maringo, Jerico and other places in Nairobi and other selected parts of Kenya,” Mr Rotich said.

The facilities will be voluntary and available to those who can afford them.

TOP OFFICERS

Top State Officers such as governors, Cabinet secretaries, the Secretary to the Cabinet, the Attorney-General, the Chief of the Defence Forces and the Auditor-General can borrow upto Sh40 million for a mortgage and Sh10 million for a car loan.

Junior civil servants in job groups A,B,C,D,E and F have been allowed to borrow upto Sh600,000 in car loans and Sh4 million for a mortgage.

The facility may however be inaccessible for low cadre government workers who have low salary ranges and high level of basic commitments.

Civil servants in Job group A earn a basic pretax salary of Sh9,420, while those in Group B earning Sh9,960 and Sh10,380 in C, Sh11,370 in D, Sh13,140 in E and Sh16,080 for those in Group F.

“The duration of the scheme shall be a maximum of twenty (20) years for mortgage schemes and five (5) years for Car Loan,” said a circular signed by Mrs Sarah Serem, the chairperson of the Salaries and Remunerations Commission.

Mrs Serem said that the National Government, individual State agencies and county governments are to make separate arrangements for the mortgage and the car loan deal by providing for the allocation in their respective budgets.